Assessing the Impact of Transport and Energy Infrastructure on Poverty Reduction - Chapter 5 pdf

Comparison of Sample Counties, Sample Prefectures, and All Poor Counties in Shaanxi Province Based on 1993 Census Source: Shaanxi provincial database, PRC study team field survey databas

National Context

The PRC is the most populous nation in the world,

with about 1.25 billion people, representing

al-most half of all people served by ADB and more

than one fifth of all people in the world The PRC has

exhibited remarkable economic growth and success in

poverty reduction since the 1980s Its gross national

in-come per capita was estimated at $890 in 2001, equivalent

to $4,260 in 1993 purchasing power parity terms.9 On the

average, the PRC is densely populated, with 136 persons

per square kilometer (km2) However, population density

varies considerably from the urbanized and industrially

developed coastal areas to the remote provinces of the

west PRC social indicators are generally good, with an

average life expectancy of 70 and an adult illiteracy rate of

16%

The PRC has experienced explosive economic growth,

with an average annual growth rate of 10% between 1990

and 2001 The benefits of this growth have been fairly

widespread, although there is a distinct gradient of

devel-opment from the eastern coastal areas through the central

provinces to the relatively underdeveloped western part of

the country In the past, inadequate infrastructure has been

a major barrier to growth and to the diffusion of its

ben-efits to all parts of the country Since the PRC undertook

market-oriented reforms and opened its economy to

international trade, the Government has invested heavily

in infrastructure development, with strong support from

the development finance community As incomes

increased, so did social inequity; the country had a Gini

index of 40 in 2001 The Government’s poverty reduction

programs seek to combat this problem

Poverty Reduction

When the PRC was established in 1949, poverty wasendemic in the country Equitable distribution of wealth wascentral to its ideology and command economy Economicreforms begun in 1978 aimed to transform the PRC into asocialist market economy “with Chinese characteristics.”These ref orms altered the prof ile of poverty byenabling the majority of the rural poor to advance, whileleaving some behind Poverty was largely (officially) con-fined to rural areas by the policy of household registration,which did not permit rural-urban migration Unofficial mi-grants to the cities were thus not eligible to benefit fromurban services However, the rapid expansion of employ-ment opportunities in the coastal provinces and in citiesencouraged a steady stream of rural-urban migrants.While this process has undoubtedly contributed to economicgrowth and efficient resource allocation, it has also resulted

in the beginnings of urban poverty

Official reports estimate that rural poverty declinedfrom about 10% of the rural population in 1990 to 3.4%

in 2000, or about 30 million people In 2000, the officialpoverty line in the “PRC was” 625 yuan annual per capitaincome, equivalent to about $75.10 This line is determined

by first targeting the Government’s resources for povertyreduction to the poorest, and then setting the poverty line

at the limit of population that can be served with able resources It is notably lower than the international

avail-“extreme poverty” line of $1 per day ($365 per year).Using the international standard, the World Bank alsonoted a sharp decline between 1990 and 1998 in extremepoverty, from 31.3% to 11.5% of the rural population(World Bank 2001b) According to this standard, morethan 100 million people in the PRC were still living inextreme poverty in 1998 The remaining rural poverty is

Chapter 5

PEOPLE’S REPUBLIC OF CHINA

COUNTRY STUDY

9 All figures in this paragraph are taken from the World Development

Indicators annexed to the 2003 World Development Report (World Bank

2003a).

10 This line was originally set at about two thirds of the international day poverty line expressed in 1993 purchasing power parity terms Its domestic purchasing power may not be adequately represented by its dollar equivalent today.

$1-a-increasingly concentrated in the country’s western

prov-inces, mostly within remote and mountainous townships

Because of access problems, these areas are also relatively

deprived in food security and health care and education

services This suggests an approach to poverty reduction

based on geographical targeting In addition, minority

peoples and the disabled are disproportionately represented

among the rural poor

Until recently, the PRC’s poverty reduction strategy

targeted poor counties, although half of the poor reside in

counties other than those designated as poor Poor counties

are mainly located in the western part of the country, in

hilly or mountainous terrain with relatively poor soils and

rainfall, where the task of increasing agricultural

produc-tivity has proved most difficult Deforestation and soil

ero-sion due to population pressure on the natural resource base

often complicate the task Within these counties, assistance

intended for the poor showed “substantial leakage” to

nonpoor residents Today, the PRC’s poverty reduction

strategy targets poor townships and aims to improve the

financial monitoring and supervision of poverty programs

Participatory programs focusing on improving upland

agriculture and better targeting it to market opportunities

will enhance the productivity of the poor The strategy

also stresses the need to provide improved road access and

other basic infrastructure, so as to deliver needed services

to the remaining rural poor at a reasonable cost

A study conducted for ADB in 2002 by the National

Rural Social and Economic Survey Team, to help

deter-mine the definition of poverty to be used in ADB’s

Pov-erty Partnership Agreement with the PRC, found that the

annual income level corresponding to a minimum

con-sumption of 2,100 calories per day, plus an allowance of

60% for nonfood consumption, would be approximately

1,300 yuan ($160) Using the corresponding

consump-tion expenditure of 860 yuan (excluding productive

investments and debt service), and based on data from the

2000 Rural Household Survey sample, the study estimated

a current national poverty rate of 23.2% of the rural

popu-lation, or about 215 million people Clearly, by any

stan-dard, a great deal of poverty still exists in the PRC In

addition, many of those who are not officially poor have

only recently emerged from poverty and are vulnerable to

various risks

The PRC’s approach to poverty started with income

transfer programs However, it soon became apparent that

redistribution of national resources would not be adequate

to meet the needs of the poor It would be necessary for the

poor to engage in self-help, initially through the

construc-tion of public works, mainly roads and water supply

sys-tems (Zhu and Jiang 1996) To that end, 331 poor ties were identified and targeted for national support.Another 368 poor counties were identified in each prov-ince to receive assistance through the provincial govern-ments Local and county governments were expected toassist poor communities located outside the designatedpoor counties In addition to grants to communities forpublic works, funds were made available through loansfor communities to undertake productive projects on theirown initiative The goal was to stimulate the creation ofsustainable employment opportunities in rural areas forthe poor Lessons learned from the implementation of thisapproach pointed to the need to make complementaryinvestments in health care and education in the poorest areas,focus on food security for the poor as the primary goal ofpoverty reduction, and involve the poor themselves more fully

coun-in program planncoun-ing and implementation

An empirical investigation of the determinants of sumption growth for farm households in the PRC usedpanel data on the southern PRC from the Rural House-hold Survey over 1985–1990 to show that geographicallocation makes a difference (Jalan and Ravallion 2002).The study found that living in a poor area lowers the pro-ductivity of a farm household’s own investments, in turnreducing the growth of household consumption Theaspects of “geographic capital” that affect consumptiongrowth include both privately and publicly provided goodsand services, such as rural infrastructure and associatedservices This research strengthens the case for expandingpublic investment in poor areas, on grounds of equity andefficiency

con-A study to evaluate the effects of public expenditures

in dif f erent sectors on rural productivity and povertyreduction was carried out for the PRC by researchers based

at IFPRI (Fan, Zhang, and Zhang 2000) This study used

an econometric model similar to one that had been used

in India (see Chapter 7) and was subsequently used inThailand (see Chapter 6) However, the specifications ofthe model were slightly different in the PRC Communitydevelopment, health care, and soil conservation expendi-tures were not included in the PRC model, but telecom-munications expenditures were included The studyshowed that education expenditures had the greatestimpact on poverty reduction in the PRC, followed byrural telephones, agricultural R&D, and then roads andelectricity, having approximately equal effects For agri-cultural productivity, R&D was most important, followed

by education and rural telephones, with roads and tricity again in fourth and fifth places Irrigation invest-ments had a positive impact on agricultural growth, but

elec-little effect on poverty The main conclusion drawn from

this study was that all the types of investments considered

have positive consequences, both for growth and for

erty reduction; thus, all are “win-win” strategies The

pov-erty reduction effects of infrastructure investments

(tele-communications, roads, and power) came about mainly

through increased nonfarm employment and improved

wages in the agriculture sector

ADB has undertaken numerous technical assistance

(TA) activities to assist the PRC Government in

formu-lating poverty-focused policies and programs, especially

in the infrastructure sectors It has supported

participa-tory rural and urban poverty assessments through TA

5894-REG, Facilitating Capacity Building and Participatory

Activities II (ADB 2000d), together with an urban

pov-erty study (TA 3377-PRC, Urban Povpov-erty Study [ADB

2002b]) It has also provided support to help develop a

methodology for county-level poverty reduction planning

(TA 3610-PRC, Preparing a Methodology for

Develop-ment Planning in Poverty Blocks under the New Poverty

Strategy of the PRC [ADB 2001e]) Other TA projects

carried out for transport and energy are discussed below

under the sectors concerned

Transport Sector Policy

The PRC Government has been investing heavily in

infrastructure development to promote and support the

high rates of growth already achieved Annual investment

in the transport sector more than doubled between 1990

and 2000, from 12.38 billion yuan ($1.5 billion) to 27.12

billion yuan ($3.5 billion) During this period, the length

of highways increased from 1.0 to 1.4 million km, whilethe length of railways increased from 53,400 km to 58,650

km The volume of passenger and freight traffic grew matically as well Passenger traffic increased from 563billion passenger-km per year in 1990 to 1,226 billionpassenger-km in 2000, while freight traffic grew from26,200 billion ton-km in 1990 to 44,450 billion ton-km

dra-in 2000 An dra-increasdra-ing share of both passenger and freighttraffic takes place on the nation’s highways Roads ac-counted for 91% of all passengers and 76% of freight ton-nage transported in 2000

Major policies in the transport sector concern the

fi-nancing of infrastructure construction andoperation and sector and enterprise manage-ment, as well as promoting regional devel-opment Planning for transport development

is the responsibility of different levels of ernment In some cases, financial support forinvestment is provided by the internationaldevelopment community and the private sec-tor Among the targets established in theTenth Five-Year Plan (2001–2005) are to

gov-• improve the main railway network, cially in the western regions;

espe-• construct the Tibet railway and Shanghai high-speed railway;

Beijing-• extend the length of the rail network to75,000 km by 2005;

• accelerate the construction of the nationaltrunk highway network;

• support construction of eight highways in the westernregions; and

• extend the length of the highway network to 1.6 lion km by 2005, including 25,000 km of expressways.Transport investment is an important component ofthe PRC’s overall development policy, focused on the west-ern region Existing roads and highways in the region are

mil-to be upgraded under the Tenth Plan

Since 1984, the PRC has implemented “food for work”programs to assist poor areas in improving their transportinfrastructure In the Ninth Five-Year Plan period (1995–2000), funds invested in road construction through thefood for work program amounted to 9 billion yuan ($1.1billion), supporting the construction of over 100,000 km

of roads in poor areas This represented about 80% of allrural roads constructed during this period With increas-ing investment, the accessibility of poor farmers has

This PRC family proudly shows off its transport: part motorcycle and

part two-wheeled “trailer”.

improved significantly Official statistics show that nearly

92% of villages in poor counties had gained access to

motorable roads by 2000 This may overstate the actual

access provided to poor farmers Administrative “villages”

may include several settlements, and a village is

defined as accessible to motorized transport if any one

settlement in the village has been connected to a motorable

road However, about 700 townships and 44,000

adminis-trative villages were still not connected by motorable roads

in 2000, mostly in the western provinces The

Govern-ment has placed a priority on completing motorable road

access to all these townships and villages by 2010

The Ministry of Communications and Ministry of

Railways are responsible for planning and managing the

national road and rail networks, respectively, in

associa-tion with other relevant central government agencies They

consult with the provincial governments on the location

of national road and rail links The provincial road and

rail agencies plan and manage the networks at the

provin-cial level, in association with other relevant provinprovin-cial

agencies These plans must be approved at the central level

by the relevant ministry and the State Development

Plan-ning Commission

Local railways are constructed and operated by local

authorities or private investors Roads are also managed

by different levels of government County and township

roads are normally planned and constructed by county

authorities Village roads may be planned and constructed

by the county roads department, by various poverty

reduc-tion programs, or by villagers themselves Local road

con-struction is mainly funded by local governments, with

some support from the central Government for road

con-struction in minority, remote, and poor areas County road

agencies can collect special road construction taxes and

vehicle sales taxes to finance road improvements They

can also issue local bonds and shares to mobilize resources

from the private sector

Recent developments in transport sector policy reflect

the Government’s increasing emphasis on

decentraliza-tion and institudecentraliza-tional reform Although more

responsi-bilities have been shifted to the provincial, county, and

municipal governments, the numbers of staff at all levels

have been sharply decreased Some functional units may

be transformed into private enterprises, such as road

con-struction and maintenance teams Remaining bureaus and

institutes may be corporatized Road maintenance funds,

previously collected from vehicle owners as a property

tax, will now be derived from fuel taxes to more closely

reflect real use of the highway system

ADB, together with the World Bank and the JBIC, hasbeen a strong supporter of the PRC’s transport invest-ment program ADB has provided a great deal of TA intransport policy and planning, traffic management, roadsafety, project preparation, and environmental assessment.International development partner support initially con-centrated on increasing economic efficiency by removingbottlenecks and expanding capacity through highways, rail-way, and port construction However, development part-ners have gradually integrated poverty reduction concernsinto the design of their projects, often by adding feederroad components ADB recently assisted the Government

in developing an analytic framework for the nomic assessment of road projects, including ex ante as-sessment of the flow of benefits from expressway projects

socioeco-to the poor (TA 3900-PRC, Socioeconomic Assessment

of Roads Projects [ADB 2004b]) The PRC’s Institute

of Comprehensive Transport implemented the study incollaboration with IFPRI The study proposed a modi-fied form of the IFPRI model, using more disaggregatedmeasures of road and other infrastructure inputs, and withurban growth and urban poverty reduction, as well asrural growth and rural poverty reduction, as outcome vari-ables

At present, rural road improvements are being carriedout in five provinces of the PRC with World Bank supportthrough the RIPA program, which is linked to ongoingpoverty reduction programs in the five provinces It aims

at providing basic access to communities that are not nected to the road network Roads are selected through aranking procedure involving both economic criteria(including direct measures of poverty) and social criteria(Hajj and Pendakur 2000) Basic access is defined as theleast-cost improvement required to allow year-roundaccess by motor vehicles, suitable for use by the prevailingvehicles in the area (motorized and nonmotorized), andallowing for occasional (but not seasonal) interruptions

con-of service The options include (i) partial access, fortrips that do not require all-weather accessibility (e.g.,farm and forest roads); (ii) basic access, the minimumrequired for all-weather passability, with exceptionsunder extreme but infrequent weather conditions; and(iii) full access, a fully engineered road providing all-weather accessibility Interestingly, this program allowsvariations from officially approved design standards toserve more poor communities

Energy Sector Policy

Government expenditures in the energy sector have

remained relatively stable at about 20 billion yuan ($2.4

billion) annually from 1990 to 2000 Correspondingly,

energy production and consumption have not changed very

much over this period However, the share of coal in total

energy production has been declining, while other sources

of energy are increasing In 1990, coal accounted for 74%

of total energy production and 76% of total energy

con-sumption These rates declined to about 67% by 2000

After the United Nations Environment and

Develop-ment Conference in 1992, the PRC GovernDevelop-ment drew up

a sustainable energy development strategy, whose principles

have been reflected in numerous new laws and planning

provisions While gradually reducing its dependence on

coal as a source of energy, the Government intends to

explore for petroleum and natural gas, develop new and

renewable energy sources, and improve energy

manage-ment With reference to rural energy, the Government will

promote the rapid commercialization of rural energy

prod-ucts, promote energy-saving stoves, and develop small

hydro, wind power, solar photovoltaic (PV), geothermal,

and biomass technologies to support communities that

cannot be reached by grid power

The Government sees energy as an integral part of its

poverty reduction and rural development strategy, which

is directed at the western part of the country Two programs

focus specifically on poverty: the rural electricity network

innovation program and the renewable energy program for

remote areas In 1999, the PRC Government launched a

series of rural power supply system reforms, including

infrastructure investment and management system

reforms, aimed at reducing the cost of power supply and

the sale price of electricity in rural areas The total

invest-ment for the rural network is more than 100 billion yuan

($12 billion) The major targets of this program have been

achieved: the sale price of power has been reduced by 30%,

more rural households are connected to the system, and

rural people are provided with a more stable supply of

power

Since 1998, the government has also spent more than

100 million yuan on renewable energy projects to supply

electricity to remote county townships unconnected to

the grid The target for this program is to supply 12

county seats and 800 other towns with electricity from

renewable sources, especially wind and solar PV cells The

total installed capacity will be about 20 megawatts from

solar and other energy sources The State Power

Corpora-tion (the former Ministry of Electric Power) and otherrelated ministries have set out regulations for rural elec-trification and rural energy development Central andlocal government subsidies are also provided for someenergy projects

Official statistics show that about 92% of all villages

in the poor counties had gained access to electricity bythe year 2000 As with roads, this figure probably over-estimates the proportion of poor households that are actu-ally served by the system

Case Study Context:

Shaanxi Province

Shaanxi Province is located in the middle of the try, in the heartland of ancient China (Map 5.1) It ispotentially a major crossroads for national and interna-tional traffic For planning purposes, Shaanxi Province isconsidered to be part of the western region The capitalcity, Xi’an, is a major urban center, although the province

coun-is predominantly (over 75%) rural However, manysmaller towns are rapidly becoming urban centers In thepast 10 years, the Government has made significantinvestments in road, rail, and energy projects in ShaanxiProvince, some with ADB and World Bank financing.Over the same period, the province has experienced sig-nificant poverty reduction, with variations across the dif-ferent regions within the province

Shaanxi Province has an area of approximately 200,000

km2 and a population of more than 36 million, dividedinto 107 counties and county-level districts About threefourths of the population live in rural areas The averagepopulation density in 2001 was 189 persons per km2, butthis varies considerably from one area to another Theprovince has three natural regions: the mountainous south-ern region, the central Weihe Valley, and the northernupland plateau Population density is highest in the cen-tral region, which also contains the city of Xi’an From

221 BC to the Tang dynasty, Shaanxi was the center ofpolitical activity in China

The northern upland part of the province is on theloess plateau, where the climate and soils are unfavorablefor agriculture.11 In the south, steep slopes and soil ero-sion due to rapidly diminishing forest cover also pose prob-lems for agricultural production Shaanxi has a continen-

11 The loess plateau covers some 640,000 km 2 in the upper and middle parts of the Yellow River floodplain Loess is a light, loamy soil that is highly prone to wind and water erosion.

tal monsoon climate, but rainfall and temperature vary

sharply from the north to the south Average annual

tem-peratures range from 9 to 16 degrees Centigrade, and

annual rainfall from 265 to 975 millimeters Per capita

cultivated land is 0.11 hectares (ha) on the average,

rang-ing from 0.2 ha in the loess plateau to 0.1 ha in the central

region and 0.08 ha in southern Shaanxi Province The

variation between south Shaanxi and north Shaanxi in

veg-Map of Shaanxi

to go here

etation, rainfall, temperature, and population pressure isvery similar to the variation between the southern andnorthern PRC In this respect, Shaanxi Province may beconsidered as representative of the entire country.Shaanxi Province sustained high economic growthfrom 1990 to 2000 The annual average growth in real percapita income over this period was 7.5% However, thiswas not as high as the national growth rate Consequently,

GDP per capita in Shaanxi was 76% of the national

aver-age in 1990, while it declined to 64% by 2000 The per

capita income of urban and rural residents in Shaanxi

Prov-ince grew by 4.6% and 2.8% per year, respectively, from

1990 to 2000

The majority of workers (56%) in Shaanxi are

self-employed in the subsistence agriculture sector Women

make up nearly half the labor force The rate of

unem-ployment and underemunem-ployment in rural areas is high

Consequently, many people migrate to towns and cities

to seek work In 2001, 1.2 million or 9% of rural

work-ers did so Employment in the urban areas of Shaanxi was

once concentrated in textiles, manufacturing, and services

With the restructuring of economic activities, new industries

such as electronics manufacture and tourism have been

grow-ing rapidly The registered unemployment rate in urban areas

in 2000 was 2.7% However, this is likely to be

underesti-mated, as it takes account only of the unemployed who

have been laid off from state-owned or collective

enter-prises True urban unemployment rates may be closer to

10%, with higher rates in the country towns

Poverty

Shaanxi also has relatively high rates of rural poverty

In 2000, according to the locally defined poverty line of

700 yuan ($84) per capita, 17% of the rural residents, or

about 1 million people, were living in poverty The

income composition of poor households in Shaanxi is

dif-ferent from the national poor and provincial averages

Although poor farm households in Shaanxi have more

arable land than nonfarm households (1.8 mu [about 0.12

ha] per capita in 2000), they gained a lower share of their

income from household production and a larger income

share from wages Poor farmers in Shaanxi have much

lower land productivity than the national poor household

or the provincial average They also gain less income from

township and village enterprises (TVEs) than in other

regions Consequently, they are more dependent than

oth-ers are on finding employment elsewhere.12

Poor households in Shaanxi Province spent 6% of their

incomes on transport and communication in 2000 They

paid a higher share of their income for travel and

trans-port than nonpoor households Transtrans-port is not the

high-est expenditure priority for the poor, but increasing

expenditures on transport seem to be part of the patternfor households that have moved up and out of the povertyclass.13 In terms of assets, about 10% of poor householdsowned motorcycles and almost all households owned atleast one bicycle About half of poor households owned anelectric fan, about 40% owned a color television, and most

of the rest owned a black-and-white television.Although their income levels were substantially lower,poor households were not very different from others interms of consumption This suggests that the main differ-ence between poor households and others lies in their lim-ited ability to save and invest in productive activities

Transport

Between 1990 and 2000, the length of roads in Shaanxiincreased from about 38,000 km to about 44,000 km Theproportion of paved roads also increased, from 70% to80% Length of railways increased by 30%, from 2,458

km to 3,228 km Passenger transport increased from 2.02million persons to 2.87 million persons, while freighttransport increased from 2.16 million tons to 2.92 milliontons Highway transport increased its share in both pas-senger and freight transport over this period Though theshare of rail transport has been declining, it is still themost important transport mode in terms of person-kmand ton-km Transportation investment in the provinceincreased from 364 million yuan in 1990 to 10.6 billion yuan

in 2000, or about 28 times The role of the private sector inproviding transportation services has also grown over thisperiod By 2000, the private sector owned 46% of passen-ger vehicles and 38% of freight vehicles in the province.Both ADB and the World Bank have supported trans-port investments in Shaanxi Province The World Bank-financed First Shaanxi Highway Project in 1988 supportedupgrading and expansion of the provincial highway net-work in Shaanxi and institutional strengthening for theprovincial Transport Department; it showed that the pro-vision of basic access through all-weather roads can be aneffective means of reducing poverty in rural areas, espe-cially when combined with programs for socioeconomicdevelopment The Second Shaanxi Provincial HighwayProject in 1996, also World Bank-financed, included con-

12 The TVE policy was established in response to official restrictions on

rural-urban migration Nonfarm income from TVEs has been a major

factor in poverty reduction in rural areas of the eastern region.

13 The direction of causality is not clear It may be that increasing expenditures

on transport represents an investment with high returns (e.g., in looking for work over a wider area), thus helping people to move out of poverty Alternatively, it may be that people who move out of poverty (for other reasons) increase their expenditures on transport as a consumption good Most likely, both types of factors may be at work.

struction of five high-grade highways totaling about 240

km, as well as link roads at interchanges and about 4,100

km of rural roads under the RIPA program; it also

financed construction supervision and environmental

monitoring, maintenance of the national highways and

the provincial highway network, a provincial road safety

program, and studies and training An ex post evaluation

of this project concluded that the RIPA program

signifi-cantly contributed to improving access in remote areas

and expanding growth opportunities in poor areas of the

province (World Bank 2003b, p 20)

The Shaanxi Roads Development Project, approved

by ADB in 2001, is constructing a 176-km expressway

between Yumenkou on the Shaanxi Province border and

Yanliang, near the city of Xi’an This road is an important

missing section in the National Trunk Highway System

that will help link the western and coastal regions as part

of PRC’s poverty-oriented Western Development

Strat-egy The project will also improve 627 km of county and

local roads connecting to expressway interchanges and

connecting local communities in eight poor counties

tra-versed by the expressway The ADB-supported

Hefei-Xi’an Railway Project, which traverses the southeast part

of Shaanxi Province, will provide a direct rail link from

four interior provinces to the coastal region, providing

efficient transport for large quantities of high-grade,

low-sulfur coal from Shaanxi; it will also construct 52 new

railway stations The project is expected to generate

sig-nificant direct and indirect employment benefits At

present, ADB is preparing an Urban Transport Projectfor Xi’an that will include construction of a ring road andconnector roads to the urban network, as well as urbantransport planning, traffic management, safety, and main-tenance components

Energy

Energy production increased by 50% between 1990and 2000 in Shaanxi Province In the same period, energyconsumption increased by 17% Investments in the en-ergy sector grew from 1.42 billion yuan to 10.3 billionyuan over this period The four main energy sources of theprovince are crude coal, petroleum, natural gas, and hy-droelectric power Petroleum production grew at the fast-

est rate Shaanxi Province is clearly anet energy exporter, but the electric-ity consumption of urban and ruralresidents increased three-fold be-tween 1990 and 2000; that of ruralresidents increased 4.4 times duringthis period, largely due to rural vil-lage electrification programs.ADB has been active in the PRC’senergy sector policy dialogue, withthe aim of promoting more efficientmanagement and more equitableprice policies and recognizing therole that energy can play in povertyreduction in rural areas However,neither ADB nor the World Bank hasyet financed an energy project inShaanxi Province A Global Environ-ment Facility project implemented bythe World Bank in western PRC,including Shaanxi Province, is pro-moting the installation of small solar PV systems to meethousehold energy needs

Throughout the country, railway construction generates substantial direct and

indirect employment.

railways have been built or are under construction in the

prefecture; most of the main highways have been paved

The major constraint on rural poverty reduction in Yulin

Prefecture is water scarcity

Shangluo Prefecture

Shangluo, in the south, has also experienced major

changes in its rail and highway infrastructure in the past

5 years Shangluo Prefecture underwent about $2 billion

in highway construction between 1996 and 2000, to build

466 km of new highways and rebuild 1,802 km of existing

highways The railway from Xi’an to An’kang passes

through the counties of Zhashui and Zhen’an, which were

selected as study sites The opportunities for poverty

reduction in Shangluo are mainly constrained by the very

limited amount of arable land owned by farmers

Methodology

Definition of Poverty

The PRC study team used four different definitions of

poverty in its analysis The first is a measure of

income-based poverty income-based on the official poverty line, which was

equivalent to about 66% of the international “$1-a-day”

standard established in 1998 (in 1993 purchasing power

parity terms) The second definition is poverty based on

incomes of less than $1 a day The third is based on

con-sumption expenditures of less than $1 a day The fourth

measures poverty in the value of household assets, defined

as less than 50% of the sample average value of assets per

capita The calculation of asset-based poverty includes

the values of housing, productive assets, furniture, and

elec-trical equipment Based on data from the field survey, the

team found relationships between

income-based poverty (using the

offi-cial poverty line) and asset-based

pov-erty that are expressed inTable 5.1

Thus, although only 20% of the field

sample households were poor

accord-ing to the official income-based

mea-sure, nearly half the sample households

were relatively deprived in terms of their

asset base This suggests that many

income-based “nonpoor” households

have only recently emerged from

pov-erty, possibly in response to recent

trans-port and energy investments

Transport and Energy Interventions

The study examined the use of transport and energyservices by poor and nonpoor households in selected poorcounties in the two prefectures of Yulin and Shangluo Aneconometric analysis of household survey data was con-ducted, using household access to transport and energyinfrastructure, the quality and intensity of services, house-hold expenditures on services, and the value of transport-and energy-related household assets as input variables.Case studies then looked more closely at the impacts ofroad and railway construction, the impacts of bus and rail-way stations, and synergies created by adding complemen-tary investments

Research Methods

The study used household data from two sources Thefirst is the Shaanxi provincial database for poverty moni-toring This database contains data from surveys conductedannually from 1997 in the 50 officially designated poorcounties of Shaanxi Province In each poor county, 5 to 10villages are randomly selected, and within each village, 10sample households are randomly selected These house-holds maintain daily records that provide information onincome, expenditure, assets, and demographic change Thisstudy used data for 1,180 sample households in the 19poor counties located in Yulin and Shangluo prefectures

Of these households, 1,143 were the same in 1998 and

2001 Thus, this can be considered panel data, i.e., datacollected regularly from the same subjects

The study team also undertook field surveys in fourcounties, two in Yulin and two in Shangluo The selection

of sample counties was based on the incidence of poverty

Income-Source: Shaanxi provincial database.

Table 5.1 Income-Based Poverty and Asset-Based Poverty

in 1993 (the date of the earliest available poverty data).

All poor counties in the province were ranked by the

inci-dence of poverty in 1993 Four counties were selected

from this list using systematic random sampling Three

of the four counties were located in Yulin and Shangluo

prefectures For convenience, the list was adjusted by

selecting another county within those prefectures with

characteristics that most closely matched those of the

fourth county selected through random sampling The

finally chosen counties are Shenmu and Jingbian in the

north and Zhashui and Zhen’an in the south (Table 5.2)

In 1993, on average, the sample counties had a higher

GDP per capita than the prefecture and provincial

aver-ages, but a lower per capita income and a markedly higher

incidence of poverty This particularly reflects the

situa-tion in Shenmu county, where a high GDP was generated

by state-owned enterprises (coal mines), but the benefits

were not widely shared with local farmers With the

development of local coal production, this situation has

now changed

In consultation with county and local officials, the study

team selected three sample villages within each sample

county, based on recent changes in transport and energy

infrastructure The county poverty alleviation office

main-tains a list of poor households in each village, a

classifica-tion dating from 1996 The team used this list in

combi-nation with a list of households classified by economic

activity, prepared by village officials, to establish a sample

frame for each village Based on the proportion of

house-holds engaged in each economic activity and the

propor-tion of poor households, the team determined the number

of households to be selected from each category (Table5.3) Ultimately, the field survey sample covered 624households, of which 130 were officially listed as poor.This sample represented 30% of all households in thesample villages

The characteristics of the field survey sample matchedwell with the characteristics of the sample drawn from theprovincial survey database The lower value of assets andgreater incidence of poverty in the field survey samplemay be explained by the fact that these data for the fieldsurvey sample are for 1996, while the provincial data (inthe second part of the table) are for 1998

The field study included village key informant views, household interviews, participatory assessments,and focus group discussions Key informant interviewswere used to obtain data on village-level changes in trans-port and energy infrastructure and services and on socio-economic changes in the village in general The house-hold interviews focused on assessing the household-levelimpacts of transport and energy changes Participatorydiscussions were carried out in all the sample villages toassess the impacts of transport and energy changes and theconstraints preventing villagers from taking greateradvantage of these interventions In each village, at least

inter-30 participants of varied occupations and gender uted to the assessment

contrib-To ensure that vulnerable groups, such as the poor andwomen, had the same opportunities as others to voice theiropinions, special arrangements were made during the par-

ticipatory group cussions First, thecommunity leaderswere separated fromthe ordinary farmers

dis-to avoid the leaders’dominating or inter-fering with the discus-sion For this pur-pose, a group inter-view with communityleaders was arrangedwhile the f armers’group discussion wasgoing on Second, allparticipants wereasked to write downbasic informationsuch as their name,community, and

Population Income per GDP per Poverty

Table 5.2 Comparison of Sample Counties, Sample Prefectures, and

All Poor Counties in Shaanxi Province

(Based on 1993 Census)

Source: Shaanxi provincial database, PRC study team field survey database.

cessing, construction,commerce, and ser-vices, as well as in larger-scale commercial agri-culture Finally, institu-tional interviews werecarried out with repre-sentatives of transportand energy agencies tocomplement statisticaldata with current infor-mation on developmentstatus and change, sup-ply of services, andinstitutional gover-nance, as well as to iden-tify policy and institu-tional barriers to theparticipation of the poor

in infrastructure projectbenefits

Data from the vincial survey for 1,018households, as well asdata from the field sur-vey for 620 house-holds, were used toestimate probit mod-els (a type of probabil-ity estimate) relatingtransport and energyvariables, as well asother socioeconomicvariables, to the prob-ability of a household’sbeing poor in 2001.Selected data, both quantitative and qualitative, were used

pro-to analyze the impacts of specif ic interventions Theresults were then used to formulate recommendations forimproving the impact of national policies and programs

vil-experiences with transport and energy, and then to read

the card aloud as an introduction when speaking to the

group for the first time This placed all participants on an

equal footing Finally, other participatory tools were used

to give equal opportunity to all participants, such as

impact matrixes, and household mobility mapping

Smaller group discussions were held on some issues to

increase the interaction among participants, especially

those from vulnerable groups

Focus group discussions were also organized with

spe-cific groups of transport or electricity users of various

business backgrounds and gender The participants in these

discussions were those who made the greatest use of transport

and energy services They were engaged in transport,

pro-Total Households Poor Households County Village Households in Sample in Sample a

a According to the 1996 listing.

Source: PRC study team field survey database; Shaanxi provincial database.

Table 5.3 Distribution of Sample Households

Field Survey Provincial Survey Characteristic Sample (1) Sample (2) Ratio (2)/(1)

the county headquarters at Dagou and 5 km from the

near-est highway At 323 households, it is the largnear-est village in

the sample An earth road to Dagou was constructed in

1970 and improved to all-weather standards in 2000 The

town was electrified in 1995 and every household in the

town has a connection Thirty-two households in the

vil-lage have motorcycles and 5 have agricultural tractors;

none owns a truck Eleven households have refrigerators,

and more than 300 have television sets Twenty-nine

holds have telephones, installed since 1997 Three

house-holds are engaged in agricultural processing and the

vil-lage has about 15 shops Some farmers raise livestock and

vegetables as well as less perishable crops; one household

has a greenhouse Young people have been leaving the

village to look for work since 1988

Chelukao is also a relatively large village with 265

households It is 15 km from the township center at

Dong-keng and 37 km from the county seat An earth road was

constructed from the village to the township center in 1972,

and in 1976 the road from the township to the county seat

was improved to all-weather standards In 1998, the whole

village was electrified Twelve households have

motor-cycles and 15 have tractors; 86 have television in their

homes and 6 have telephones The village has three shops

and four processing industries: two rice and flour mills

and two producers of cooking oil One village household

has a truck and provides transportation services to the

entire community About 15% of the households raise

live-stock, mainly sheep People have been leaving the

com-munity to seek work since 1985; the first group of

long-term migrants moved away in 1987

The village of Dacha is smaller, at 188 holds, but still large in comparison with some ofthe other villages in the sample It lies 10 km fromthe township center at Zhenqing and 20 km fromthe county seat It is connected to the township cen-ter by an earth road constructed in 1997 Electric-ity became available in the village in 1987 Fortyhouseholds have television sets The village has 15motorcycles—but no other motorized vehicles—eight shops, and three processing enterprises Thisvillage has a TVE, a chicken farm owned by fourhouseholds Fifteen households raise sheep About

house-60 people have left the village to look for work, and

30 have moved away for long-term employment.Shenmu County (Yulin Prefecture).The village of Mengjiagou is a relatively smallvillage of 100 households Part of the township ofHejiachuanit is located 10 km from the nearesthighway and 49 km from the county seat Until recently, ittook 8 hours for residents of Mengjiagou to reach thecounty seat Since the construction of the Shen Peng Road

in 2000 and the Sha He Road in 2001 to all-weather dards, it takes only 1 to 2 hours to get there The villagewas electrified in 1978 Since the roads were improved,the number of motorized vehicles has increased dramati-cally: now there are 30–40 motorcycles, 80% of whichwere bought in the last few years, and 10 trucks, 7 of whichwere bought in the last few years Eighty households haverefrigerators, 45 have washing machines, 35 have refrig-erators, and 31 have telephones The village has 15 stores,

stan-10 of which were established since the road was improved.Eight households have established processing industries,five of them since the road was improved While few house-holds raise livestock, four households have built green-houses for vegetable production Few people have left thevillage looking for jobs, but 70–80 persons participated

in the road construction activity, earning 20–35 yuan perday

The village of Taihezhai is a township center located

68 km from the highway at Shenmu An earth road to thecounty seat was built in 1978 and paved in 1999 Electric-ity came to Taihezhai in 1982, and the supply of electricitywas strengthened in 2001 Although the townspeople didnot start to invest in motorized vehicles until recently, 83households have purchased television sets since 1983 Tenhouseholds have telephones The village includes 6 shops,

2 restaurants, and 1 hotel Five families are engaged inprocessing activities However, relatively little investmenthas taken place in agriculture and livestock Since the road

Community representatives in Zhen’an County, Shaanxi Province,

exchange views with members of the study team.

was first built, about 35 households have migrated out of

the community to find work

Gaorenlimao, a village in Qiaochatan township, is

located 108 km from the county seat at Shenmu, and 10

km from the township center Here also, an earth road was

built in 1978 and paved in 1999 Electricity became

avail-able in Gaorenlimao in 1982, and the village also

ben-efited from network strengthening in 2001 The pattern

of investment in this remote community is similar to that

for Taihezhai The community has 5 tractors (including 2

bulldozers), 6 trucks, and 2 minibuses purchased since

the road was paved Sixty families purchased television

sets shortly after electricity came to the village; 10 now

have telephones and 5 have refrigerators The village

includes 3 shops and 3 processing enterprises Investment

in agriculture is limited, except for about 30 families that

raise sheep Since the earth road was first built, more than

100 inhabitants have left the village to look for

employ-ment elsewhere

Zhashui County (Shangluo Prefecture).The

village of Yingzhen is located 1 km away from the

town-ship center at Yingpan and 18 km from the county seat It

is served by an all-weather road that was constructed in

1976 A railway passes near Yingzhen and the village is

only 1 km from the railway station at Yingpan The town

has 196 households, and many residents have found

employment in road (350 persons) and railway (270

per-sons) construction Electricity has been available since

1982 to three settlements within the village, but one

settle-ment still has no electricity Ten households provide

trans-portation services, with 6 minibuses and 2 trucks in the

village, as well as 4 tractors, 20 motorcycles, and 43

tri-cycles Almost all households have television sets, and 20

have refrigerators The village includes 20 shops and 7

households engaged in agricultural processing There is

also a village brick-making enterprise Agricultural

activity is rather limited in Yingzhen Some 200 people

have left the village to look for work elsewhere

Mingxing is a relatively large village (220 households)

located 3 km from the highway at the township center of

Xialiang and 13 km from the county seat The railway

passes by Mingxing and a railway station is located at

Xialiang An earth road was constructed from the village

to the town in 1971 In 1976, this road was upgraded to

all-weather standards connecting to the town and the county

seat About 200 persons from Mingxing have been

employed in road construction and 100 in railway

con-struction The village has 4 trucks and 4 minibuses, as

well as 15 motorcycles and 51 tricycles Fifty households

have refrigerators, 150 have television sets, and 75 havetelephones Four shops are located in the village, and 20households are engaged in agricultural processing Sixtypeople are employed part-time in transportation services,

20 are involved in long-distance trading, and about 10have other specialized businesses Four village enterprisesdate from 1992 About 40 households raise livestock,mostly sheep Only a few people have left to look for work,many years ago before the improved road was built.The village of Yaowanggou has 70 households, thesmallest in the sample It is located 6 km from the high-way at the township center of Yingpan and 36 km fromthe county seat An earth road was constructed from thevillage to the town in 1999 The railway passes within 5

km of Yaowanggou, but the nearest railway station is 10

km away About 80 persons from the village have beenemployed in highway construction and 30 in railwayconstruction The village was electrified in 1989, andthe system was upgraded in 2002 The village has

8 motorcycles, 1 tractor, and 1 tricycle, all purchased since

1997 Sixty-one households have television sets, 3 haverefrigerators, and 12 have telephones No shops or otherfamily or village enterprises are located in the village,although two households provide transportation services.About 30 households have left the village to seek workelsewhere

Zhen’an County (Shangluo Prefecture) Thevillage of Shantai is relatively small (100 households) It

is located 8 km from the township center of Zhangjia and

58 km from the county seat The earth road from the lage to the town was constructed in 1978 and upgraded toall-weather standards in 1997; the road from the town tothe county seat has been all-weather since 1975 The vil-lage is 20 km from the railway and 35 km from a railwaystation More than 200 persons have been employed inhighway construction and 27 in railway construction Thevillage has been electrified since 1987 The village has

vil-6 motorcycles, 9 tricycles, and 1 minibus Practically allhouseholds have television sets, while 2 have refrigeratorsand 5 have (mobile) telephones The village includes

1 shop and 3 households engaged in agricultural ing About 60 households have undertaken specializedagriculture, planting tobacco, watermelons, and fruit trees.About 35 households have substantial numbers of live-stock, mainly sheep and pigs Only 17 persons have leftthe village to look for work, starting in 1985

process-Dianshi is a relatively large village of 218 households,located 3 km from the township center of Jiezi and 11 kmfrom the county seat An all-weather road connecting the

township center to the county seat was constructed in 1987.

A road paved with stones was constructed in 1990 from

the village to the township center Some 450 persons from

Dianshi Village have been employed in highway

construc-tion and 210 in railway construcconstruc-tion One village group

(four households) was connected to electricity in 1981,

but electricity became available to the whole village only

in 1990 The system serving one settlement was upgraded

in 2001 The village has 48 motorcycles, 6 trucks, 4

trac-tors, and 5 tricycles; 15 households provide

transporta-tion services Twelve households have refrigerators, 68

have telephones, and 182 have television sets The village

has 20 shops and 8 processing enterprises, and 1 TVE in

mining Two households are engaged in long-distance

trad-ing, and five have other specialized businesses Quite a

number of households raise sheep and pigs, and others

produce vegetables Since 1986, 86 persons have left the

community to find jobs

The village of Baishu (130 households) is located

25 km from the township center of Qingtongguan and 61

km from the county seat An earth road from the village to

the township center was constructed in 1972 and upgraded

to all-weather standards in 1999 A national highway built

in 1970 connects the village to the county seat Electricity

became generally available in Baishu in 1992, although

four households have had it since 1984 The village has

10 motorcycles, 7 tricycles, 1 tractor, and 1 truck

Ninety-one households have television sets, including 60 that have

color, while only 4 have refrigerators and 5 have telephones

The village has about 20 shops and six households are

engaged in agricultural processing More than 50 farm

(tobacco) and livestock raising No migration out of the

village was reported by village authorities

Household Characteristics

Household data from the provincial survey and from

the field survey were analyzed to compare the poor with

the nonpoor, using the official income-based definition of

poverty; and the poor with the nonpoor, using the

con-structed measure of asset-based poverty In the provincial

survey data used for the probit analysis, income-based poor

households accounted for 28% of the sample and the

asset-based poor represented 30% of the sample

How-ever, these were not always the same households About

30% of the nonpoor by an income standard were poor by

the asset-based standard, and about 30% of the nonpoor

by an asset-based standard were poor by an income

stan-dard In the field survey, the income-based poor

consti-tuted 40% of the sample used for the probit analysis and

the asset-based poor constituted 55% In this case, about44% of the nonpoor by an income standard were relativelypoor in terms of assets, while 24% of the nonpoor in terms

of assets were poor as defined by the national poverty line.The distribution of household characteristics betweenpoor and nonpoor households according to these two pov-erty criteria are shown in Table 5.4 for the provincial data-base and Table 5.5 for the field survey database.Poor households, by both criteria, tend to be slightlylarger than nonpoor households, and to have slightly lowerrates of labor force participation Not a great deal of varia-tion exists between the poor and the nonpoor in educa-tional levels, although the nonpoor are slightly more likely

to have completed 6 years of schooling However, a sharpdifference exists in the percentage of households withskilled labor, especially in terms of income-based poverty.Seventy-four percent of the provincial sample householdsare located in mountainous areas, with a slightly higherproportion of nonpoor households in these areas Sixty-five percent of the provincial sample households arelocated in the north, but 91% of the income-poor house-holds are in this region Poor households are likely tohave a bit more arable land, but they are much less likelythan the nonpoor to have income from off-farm employ-ment They also have less opportunity to access technicaltraining, although they appear to have approximately equalaccess to credit

In terms of access to infrastructure, the income-poorare somewhat less likely than the nonpoor to live in a vil-lage with direct access to an improved road However, thepoor and nonpoor in terms of assets are little different inthis respect The income-based poor are slightly less likely

to live within 5 km of a bus station, but the asset-basedpoor are slightly more likely to do so, while the situation

is reversed for access to railway stations Nearly all samplehouseholds have access to electricity Though the poorhave relatively good access to transport and energy infra-structure, they are markedly less likely to use these ser-vices, as measured by per capita expenditure on transportand energy

The provincial data also show that from 1998 to 2001,the prevalence of income-based poverty increased from16% to 28% This is probably due to prolonged drought inShaanxi Province over those years However, asset-basedpoverty declined slightly, from 33% in 1998 to 30% in 2001.Data from the field survey sample differ from the pro-vincial averages in only a few respects The field surveydid register a higher incidence of poverty in the selectedsample counties and villages, particularly with respect toasset-based poverty This is partly an artifact of the analy-

= percent of households who have received commercial or policy loans during the previous year; road access = percent of households living in villages with motorable village road access; access to electricity = percent of households connected to the electricity grid.

Source: Shaanxi provincial database.

Income-Based Poverty Asset-Based Poverty Household Average Poor Nonpoor Poor Nonpoor Characteristics (n=1,018)(n=284) (n=734) (n=308) (n=710)

(1998) (in yuan)

Capita (1998) (in yuan)

Income-Based Poverty Asset-Based Poverty Household Average Poor Nonpoor Poor Nonpoor Characteristics (n=620)(n=245)(n=375)(n=343)(n=277)

Capita (1998) (in yuan)

or policy loans during the previous year; road access = percent of households living in villages with motorable village road access; distance from main road = average km from the household’s village to the main road linking it to a county town; village road density = length of motorable village roads per km 2 of village area; access to electricity = percent of households connected to the electricity grid; electricity improvement = percent of households living in villages with a “reformed” electricity grid connection (larger loads and more reliable service).

Source: PRC study team field survey database.

Table 5.5 Characteristics of Poor and Nonpoor Households (Field Study Database)

sis, since a higher average value of assets was constructed

for the field survey sample, reflecting in part the effects of

the transport and energy interventions studied However,

greater disparities between the poor and the nonpoor were

found in the field sample than in the provincial sample In

the field survey, the asset-based poor had a slightly higher

rate of labor f orce participation than the asset-based

nonpoor, but the differences are small and may not be

statistically significant The average years of education figure

recorded by the field survey is lower than the provincial

aver-age for poor counties, between 4 and 5 years rather than 6

years, with nonpoor household members being more likely

to have completed 5 years of schooling In the field survey,

a question was also asked about family health About 87%

of all households reported good health, but poor

house-holds were less likely to do so than nonpoor househouse-holds

Over 90% of the field survey sample households,

com-pared with 74% of the provincial sample, are located in

mountainous areas However, in both cases a higher

pro-portion of the nonpoor lives in the mountains As in the

provincial sample, poor households cultivate more land

than nonpoor households, but are markedly less likely to

have income from off-farm employment Among the field

survey sample households, much less difference is notable

between the poor and the nonpoor in access to technical

training than in the provincial sample In both cases,

rela-tively little difference was found in access to credit

Asset-based poverty appears to be more important than

income-based poverty in determining household access to

techni-cal training and credit

The field survey added some further measures of the

quality of transport and energy infrastructure available to

the sample households Just over half of all sample

house-holds had village access to a paved road The

income-poor were slightly less likely than the income-based

non-poor to live in a village with a paved road; the difference

was larger between the asset-based poor and nonpoor The

average distance from a main road was 42 km, with poor

households, on the average, living farther from the road

than nonpoor households Village road density varied little

as far as the income-poor were concerned, but slightly

more for the asset-based poor Per capita expenditures on

transport were notably higher for the field survey sample

than for the provincial sample, although large differences

between the expenditures of the poor and nonpoor were

recorded in both cases Some 28% of field sample

house-holds had benefited from improvements in the quality of

service provided by the rural electricity grid Here, too,

the percentages of poor and nonpoor households

benefit-ing from these improvements showed marked differences

The field survey did not attempt to reconstruct hold incomes at a previous point in time However, it didrecord the value of household assets in 1996 Asset-basedpoverty increased from 48% to 55% between 1996 and

house-2001 among the surveyed households This was mostlikely due to the prolonged drought, which forced manyhouseholds to liquidate assets However, about 20% ofthe households that were asset-poor in 1996 were notasset-poor in 2001, indicating some progress in assetpoverty reduction

on both transport and energy However, the expenditures

of the poor on transport and energy are significantly higher

as a percentage of their income than those of the nonpoor:the poor spend, on average, 18% of their (cash) income ontransport and 25% on energy, while the nonpoor spendless than 8% on either service This proportion declinessharply, especially for transport, with rising income levels.Relatively little variation in expenditures on electricitycan be seen In fact, the poor, as defined by the national

poverty line, actually spend, on average, a little more than

the nonpoor on electricity The major difference, as far as

energy is concerned, is in the value of expenditures on

other fuels This may reflect the greater propensity of

non-poor households to own motor vehicles and also, perhaps,

to use LPG appliances such as stoves It may also be

related to the greater propensity of nonpoor households

to own processing assets, which may be powered by grid

electricity or other fuels (e.g., diesel)

Detailed information about the transport and energy

assets owned by poor and nonpoor households is presented

in Tables 5.7 and 5.8 Bicycles are the most popular means

of transport for both poor and nonpoor households About

one third of all households are still using animal traction,

mainly donkeys and oxen, for goods transport

In north Shaanxi, where over half the province’s poor

counties and poor population are located, donkeys have

played an important role in farming They have been used

for threshing grain as well as for transporting crops to

market and inputs from market to farm With the

con-struction of motorable roads, agricultural three-wheel

trac-tors are starting to take the place of donkeys for farm

trans-port and threshing grain For example, Dacha village of

Jingbian county had about 900 donkeys before 1996, when

the motorable road was built By 2002, the number of

donkeys in the village had dropped to less than 400 In the

meantime, the number of agricultural three-wheel

trac-tors increased to 50

On average, 14.4% of sample households owned wheel tractors by 2002 Nonpoor households owned morethan poor households by a factor of about 30% Thesevehicles can also be used for commercial transport Agricul-tural three-wheel tractors also used to be important for pas-senger transport to markets and bus stations Recently, how-ever, the transport administrative authority forbade their use

three-to carry passengers because they are thought three-to be unsafe.This has created a problem for passenger transport in villagesnot served by buses

Motorcycles have started to become an importantmeans of transport, especially for young people Over 10%

of sample households had motorcycles Mainly, these arenonpoor households About 11% of the sample ownedother large commercial vehicles, including trucks, pick-ups, tractors, and cars More than two thirds of thesevehicles were owned by nonpoor households

Unlike nonpoor households, the poor spend more onelectricity than they do on other types of fuel This impliesthat the poor mainly use energy as final consumers (e.g.,for lighting and television) rather than as an input to pro-duction This argument is supported by the significantdifferences between the poor and nonpoor in the types ofelectrical appliances and processing assets the poor andnonpoor own (Table 5.8)

The distribution of irrigation and processing assetsstrongly favors the nonpoor The number of pumps ownedper 100 asset-poor households is less than 10% of the num-

Asset-Based Poverty Income-Based Poverty Average Nonpoor Poor Nonpoor Poor

ber owned by the asset-based nonpoor The number of

food processing machines owned by asset-based poor

house-holds is less than two thirds the number of those owned by

the nonpoor; this discrepancy is even greater with respect

to income poverty In contrast, television is very popular

with most households More than three fourths of the poor

households had television sets, as did almost all nonpoor

households This situation presents an opportunity for the

Government and other organizations to introduce newpolicies, programs, and technologies to both the poor andthe nonpoor through television programs

Changes in Transport Mode

Five years ago, 65% of the interviewed farmers went tomarket on foot This proportion has now declined to 42%

Asset-Based Poverty Income-Based Poverty Average Nonpoor Poor Nonpoor Poor

The proportion of farmers who take a bus to market has

increased from 11% to 33%, and the number of farmers

using three-wheel tractors has doubled from 3% to 6% It

is noteworthy that buses took over not only one third of

the walking trips but also almost the same share of trips

previously made by bicycle or motorcycle (mainly bicycle)

This is understandable because most of the sample

farm-ers live in the mountain areas, where bikes are not suitable

for goods transport Five years ago, the share of

(asset-based) poor farmers walking to market (61%) was less

than the share of nonpoor farmers walking to market (69%)

With transport changes, the share of poor farmers has

dropped only to 45%, while the share of nonpoorfarmers has dropped to 39% Thus, nonpoorfarmers have been more likely to take advantage

of market transport improvements (Table 5.9).County towns are usually the small cities clos-est to farmers Five years ago, about 30% of farm-ers went to county towns on foot or by bicycle.Now less than 10% do so In that period, theproportion of farmers who took the bus to countytowns (including those who walk and then takethe bus) increased from 66% to 86% The bushas become the most important means of trans-port for farmers to county towns (Table 5.10)

A striking change has occurred in the modes oftransport used by rural residents to travel to Xi’an,the provincial capital and the largest city in north-western PRC (Table 5.11) Five years ago, traintravel was not available, but today 69% of surveyrespondents take the train Significant variation between thenorth and the south exists on this point Today, 75% of therespondents in the south take the train to Xi’an, while only17% of those in the north do so Five years ago, nearly 80% ofthe interviewed farmers took the bus to Xi’an The change inmode of transport for travel to Xi’an is mainly due to thecomparative advantages of rail transport over road Theseadvantages were identified in household interviews and par-ticipatory group discussions as (i) saving time—on the aver-age, round-trip rail travel to Xi’an was about 9 hours shorterthan the road trip; (ii) greater reliability—train travel is lesslikely to be affected by storms and flooding; and (iii)

The bus is the most important means of transport for farmers traveling

to county towns.

5 Years Ago Present

Transport Mode Average Nonpoor Poor Average Nonpoor Poor

greater safety—trains are less likely to be involved in

accidents

However, the bus remains the most important means

of transport for farmers traveling to other regions within

or outside the province About 70% of the trips made to

other regions within the province are by bus, or a bus

com-bined with the train For transport to other provinces, the

bus is also the most important means of transport, but

trains have increased their share of this market These

findings show that the rail network does not serve as wide

an area as the highway network The interviewed farmersalso traveled mainly to nearby provinces

Changes in Frequency of Travel

The use of transport infrastructure is reflected not only

in the choice of transport mode but also in the frequency

of travel to different destinations Five years ago, 59% of

5 Years Ago Present Transport Mode Average Nonpoor Poor Average Nonpoor Poor

Table 5.10 Change in Transport Mode to County Town

(Percent)

Source: PRC study team field survey database.

5 Years Ago Present Transport Mode Average Nonpoor Poor Average Nonpoor Poor

all farmers in the field survey sample visited markets once

a month or more often The share of farmers visiting

mar-kets this often has increased by 10 percentage points over

the past 10 years (Table 5.12) Although the proportion of

nonpoor households visiting markets once a month or

more is still greater than the proportion of poor

house-holds, the poor have increased their access to markets more

than the nonpoor over the last 5 years

A significant change has occurred in the frequency of

travel to county towns Five years ago, less than 30% of

interviewed farmers visited county towns once or moreper month Now this proportion has increased to 46%(Table 5.13) The frequency of visits by poor farmers tocounty towns has increased at a higher rate than thesample average However, the proportion of the poorvisiting county towns once or more a month is still only63% of that of the nonpoor

The change in frequency of visits to Xi’an is very teresting (Table 5.14) On the one hand, the proportion

in-of farmers visiting Xi’an more in-often than once a month

5 Years Ago Present Frequency of Travel Average Nonpoor Poor Average Nonpoor Poor

Source: PRC study team field survey database.

5 Years Ago Present Frequency of Travel Average Nonpoor Poor Average Nonpoor Poor

has declined from 4.6% to 2.8% On the other hand, the

proportion of farmers visiting Xi’an more than once a

year has increased from 25% to 37% About 10% of the

interviewed households had never been to Xi’an 5 years

ago but are going now Interviews show that the reduction

in the proportion of farmers visiting Xi’an frequently was

due to nine farmers who traveled to Xi’an to purchase

goods to sell to railway workers during the railway

con-struction Now that the railway is completed, they no longer

need to make this trip However, the increase in the

pro-portion of farmers visiting Xi’an at least once a year is

mainly owing to the improvement of highways and the

opening of the new railway In particular, with the

improvement in transport infrastructure, more rural

work-ers travel to Xi’an to seek employment Generally, the

nonpoor visit Xi’an more frequently than the poor

In general, with the improvement in transport

infra-structure, rural residents are visiting other provinces and

other regions within the province more frequently The

shares of surveyed households visiting other regions within

the province and other provinces at least once a year have

increased by 6.2 and 5.0 percentage points respectively

(CASS 2004, Appendix 3, Table 2) For travel within the

province, the increase was almost entirely due to increased

travel by poor households However, nonpoor households

accounted for most of the increased travel outside the

prov-ince Most of them traveled to these places to seek

employment (Box 5.1)

Transport Time and Cost Savings

Changes in transport mode and in the frequency oftravel are associated with an increase in transport effi-ciency and time saving Transport times and costs used inthis study were defined as the essential time and costs spent

to make a round trip from home to destination, includingthe time and money spent in vehicles, and on accommoda-tions needed while waiting for or changing buses or trains

As shown in Table 5.15, travel time to market over thepast 5 years was reduced by 1.2 hours on average, althoughtransport cost increased almost 50% The average time totravel to county towns declined by 50%, while the costdeclined by 10% Focus group discussions and analysis ofthe change in transport services show that the decline oftransport costs to county towns is mainly due to increasedcompetition in the local transport market The number ofvehicles providing passenger transport services in the foursample counties had nearly quadrupled since 1995.Average transport times to Xi’an, other regions withinthe province, and other provinces were reduced by 33%,42%, and 15%, respectively Average transport costs tothose destinations increased by 23%, 4%, and 10%,respectively The reasons why costs increased while traveltimes decreased have to do with the lack of competition inlong-distance transport and, hence, higher prices for ser-vices In the PRC, rail transport is monopolized by thestate Competition in long-distance road transport is con-strained by high initial investment costs and other barri-

5 Years Ago Present Frequency of Travel Average Nonpoor Poor Average Nonpoor Poor